A NEW community bank will be launched in Surrey later this year in a attempt to support savers still suffering the effects of the recession.

The prospective SurreySave Credit Union is hoping to attract people who are unable to save and borrow at high street banks.

The scheme, which is expected to be in operation from October, will offer loans and savings accounts with lower interest rates alongside home insurance.

The not-for-profit organisation started out as four separate schemes in Guildford, Leatherhead, Waverley and Woking.

David Wright, Guildford councillor and chairman of the SurreySave executive committee, said they will apply to the Financial Services Authority for a licence by April.

“Credit unions are essentially local efforts in self-help,” he said.

“In the same way as working communities in the 19th century created building societies to help people save and borrow, so credit unions are doing the same thing in the 21st.

“The building societies have been taken over by high street banks and the fact that loan sharks, doorstep lenders, money shops and subprime lenders thrive in Surrey is evidence enough that the banks are not reaching out to all sections of society.”

Profits generated by union members by way of the loans are then ploughed back into services or paid out in the form of a dividend or interest on savings.

SurreySave members will be offered affordable and flexible loans at competitive rates as well as saving accounts with what are described as attractive rates of interest.

Services will also include a range of insurance products, budgeting and money management advice and assistance for those with debt problems.

Mr Wright said in the longer-term, the credit union would include low-cost home contents insurance, current accounts, child trust fund accounts and local housing allowance management.

“We need to do more here to educate and support our communities in managing their personal money affairs by controlling credit levels and encouraging saving,” he added.

Mr Wright said the union was only a handful of pledges away from the 500 it needs to fully launch. It has already secured £50,000 of funding from Guildford Borough Council.

Pauline Hedges, head of policy at the Surrey Chambers of Commerce, said she could see no drawbacks with the scheme.

“We are very supportive of the whole idea,” she said.

“I have come across plenty of credit unions when I was working in banking and they are wonderful for people who cannot get accounts.

“They cannot lend any money they do not have so it is going to be as secure as is possible in this day and age.”

She added: “It will have big businesses that have pledged to support, so you have got the community supporting the community. What could be better?”